'Drip-feed' retirement scheme proposed to stop Kiwis outliving their savings

A "drip-feed" income scheme is being proposed to ensure Kiwis don't outlive their retirement funds.

The new proposal is called KiwiSpend and would kick in when KiwiSaver members turn 65.

It would give retirees regular payments of up to $12,000 annually depending how much they save rather than a lump sum.

This money would come on top of their superannuation. 

KiwiSaver members would automatically become part of the scheme with the chance to opt out after seeking advice. 

The KiwiSpend amount would increase if people entered into high health costs, such as rest home care or medical expenses. 

The idea was proposed by Susan St John and Claire Dale of Auckland University's Retirement Policy and Research Centre.

Their idea is suggested for discussion in the three-yearly Review of Retirement Income Policies. 

St John and Dale say a single withdrawal scheme does not protect retirees against unsuccessful investments, outliving their savings, or financial exploitation. 

The man in charge of compiling the review says KiwiSpend could be the answer to Kiwi anxieties.

"Many people we've spoken to in our research for the review say they're worried they'll run out of money in retirement," said Interim Retirement Commissioner Peter Cordzt.

"An annuity scheme like the KiwiSpend product suggested... may provide members with the peace of mind of a guaranteed income stream".

Public feedback and submissions will be considered by Cordzt before he decides which recommendations will make it into his review of retirement incomes.

The final report will be presented to Government in December.

Submissions are open until October 31 and can be accessed here.